Nairobi City County is contributing more to Kenya’s economy than 29 other counties combined, a new report shows, highlighting the concentration of wealth and the importance of Kenya’s capital to the GDP of East Africa’s biggest economy.
An analysis of government data also shows that the share of economic productivity for city residents is nearly three times higher than that of other Kenyans.
Controlling Kenya’s manufacturing, construction and services industries, Nairobi generated 27.5 percent to Kenya’s gross domestic product (GDP) over the past five years, its productivity growing by about Sh700 billion in the past two years alone.
On the flipside, 29 counties contributed 26.7 percent of Kenya’s GDP in the five-year period, while at least 15 others contributed less than one percent each, the 2023 Gross County Product (GCP) report shows.
“There were notable disparities in the size of the county economies. On average, Nairobi City county accounted for 27.5 percent of the total economy’s GVA (Gross Value Added), followed by Kiambu (5.7 percent), Mombasa (4.9 percent) and Nakuru (4.9 percent) during the review period.
“The remaining 43 counties contributed between 0.3 percent and 3.3 percent each to the total GVA,” the GCP report observes.
The report reveals that counties with large commercial centres, as well as the populous ones, have higher economic productivity than those with predominantly rural settings and small populations.
“The combined contribution of 15 counties that contributed less than 1 percent was about a third of the contribution by Nairobi City County,” the Kenya National Bureau of Statistics (KNBS) GCP report noted.
The 15-- Lamu, Taita Taveta, Garissa, Wajir, Mandera, Marsabit, Isiolo, Tharaka Nithi, West Pokot, Samburu, Baringo, Laikipia, Vihiga, Busia and Tana River -- contributed a mere 8.8 percent to the GDP collectively, equivalent to 32 percent of Nairobi’s economic productivity.
As Nairobi’s economic growth so has been the share of wealth among the capital’s population -- the GCP per capita -- which stood at Sh723,335 in 2022, against the national GDP per capita which was Sh264,077. This means that on average residents of Nairobi are 2.7 times better off than an average Kenyan.
But the situation gets worse comparing Nairobi’s GCP per capita with other poorly performing counties, making clearer the picture of economic inequalities across the country. Only six counties have a GCP per capita more than the national average.
With a GCP per capita of Sh67,518, Mandera County has the lowest and shows that its residents could be the poorest in the country.
A comparison of Nairobi and Mandera shows that on per capita basis, Nairobi is more than 10 times higher than Mandera, while at national level the average Kenyan would be about four times better than the Mandera resident.
“Other counties which recorded a significant GCP per capita, above the national GDP per capita of Sh264,077 in 2022 included Mombasa (Sh439,390), Nyeri (Sh293,944) and Embu (Sh292,827).
Nyandarua, and Kiambu counties had GCP per capita that was slightly above the national average,” the report noted. GCP per capita is a key tool to measure economic development, just as poverty and inequality.
Yet the KNBS data shows that 41 counties have a GCP per capita below the national average, with the only counties above being Nairobi, Mombasa, Nyeri, Embu, Nyandarua and Kiambu. Tana River, Isiolo, Samburu, Garissa, Wajir and Mandera have a GCP per capita less than 40 percent of the national average -- Sh100,000 and below.
Nairobi’s dominance has mainly been due to its control of key economic sectors, mainly manufacturing, construction and services. About 37 percent of the manufacturing and services sectors production between 2018 and 2022 happened in Nairobi.
No other county has even a 10 percent contribution to the key economic activities, revealing Nairobi’s critical role to the national economy and a reflection of the reason behind a huge migration by Kenyans to the capital.
Nearly half of 1.6 million Kenyans migrating to towns across in 2019 went to Nairobi with most of them indicating economic reasons as the main purpose.
On manufacturing, other counties reaping fruits include Mombasa (9.6 percent), Kiambu (8.4 percent) and Machakos (7.8 percent). The top five counties building Kenya’s manufacturing sector over the past five years controlled more than two-thirds of the sector “indicating their relative importance in shaping the sector’s trajectory,” the KNBS notes.
“These counties benefit from the presence of a significant number of Export Processing Zones which could partly explain their relatively high contribution to manufacturing GVA,” the GCP report notes.
Conversely, Mandera, West Pokot, Tana River, Marsabit, and Isiolo counties, located in arid and semi-arid regions, recorded the lowest contribution to total manufacturing sector GVA.
The contribution of at least 33 counties to Kenya’s manufacturing sector is below one percent each and only seven counties contribute more than two percent to the sector.
Nairobi further controls Kenya’s services sector where its contribution averaged 37.3 percent between 2018 and 2022 while Mombasa, Kiambu and Nakuru come at a far distance at 5.6 percent, 5 percent and 4.4 percent respectively.
Twenty-one counties each contributed less than one per cent to the services GVA and only four regional units contributed more than three percent to the sector.
Most of the counties that showed good economic productivity relied on agriculture, where at least 26 contributed two percent or more to the sector.
“The five leading counties in agricultural production were Meru, Nakuru, Nyandarua, Murang’a, and Kiambu. These counties exhibited diverse agricultural outputs, including tea, coffee, maize, vegetables, potatoes, and raw milk and performed better than counties relying on a narrower range of agricultural produce,” the report notes.
Meru, the richest county in agricultural production in Kenya, owes the good performance to the sector touted as Kenya’s economic backbone to high production of fruits and forest resources.
Other counties such as Murang’a, Nandi, Kisii, Kericho, and Kiambu, relied on tea to boost their farming, while Bungoma, Narok, Trans Nzoia, and Uasin Gishu relied on large-scale grain farming such as maize and wheat, contributing 12.5 percent of the total agriculture sector productivity.
Over the five years, 17 county economies grew faster than the national average rate of 4.6 percent, with agricultural counties and those in arid and semi-arid regions particularly, recording a steady growth rate.
“The top five counties, in terms of economic growth (Marsabit, Mandera, Isiolo, Tana River, and Kajiado), grew at an average growth rate of 6.9 percent, with Marsabit growing fastest at 10.3 percent. The sharp spike in Marsabit’s growth rate in 2019 could be attributed to the full commercial operationalisation of the 310MW-capacity Lake Turkana Wind Power (LTWP) Project located in the county,” the report notes.
It adds that on average, nearly all counties recorded growth rates in real GCP of at least three percent during the review period.
